State whether the following actions will increase or...

Name: Problem 3, Chapter 8: Macroeconomics
Uploaded: 2019-08-22T16:51:18-08:00
Duration: 1 min 57 s
Channel: Erwin Antoni
Description: State whether the following actions will increase or decrease GDP: a. The United States legalizes gay marriages. b. An individual sells her house on her own. c. An individual sells his house through a broker. d. Government increases Social Security payments. e. Stock prices rise by 20 percent. f. An unemployed worker gets a job. LO1

State whether the following actions will increase or decrease GDP: a. The United States legalizes gay marriages. b. An individual sells her house on her own. c. An individual sells his house through a broker. d. Government increases Social Security payments. e. Stock prices rise by 20 percent. f. An unemployed worker gets a job. LO1

State whether the following actions will increase or decrease GDP:
a. The United States legalizes gay marriages.
b. An individual sells her house on her own.
c. An individual sells his house through a broker.
d. Government increases Social Security payments.
e. Stock prices rise by 20 percent.
f. An unemployed worker gets a job. LO1

Key Concepts

Gross Domestic Product (GDP)

GDP is a monetary measure that captures the market value of all final goods and services produced within a nation's borders over a specified period. It is a central concept in macroeconomics used to gauge the overall health and size of an economy, and is calculated by summing up consumption, investment, government spending, and net exports.

Final vs. Intermediate Goods and Transactions

In GDP accounting, only final goods and services are counted to avoid double counting. Transactions that constitute exchanges of existing assets, such as the resale of an already produced house, do not directly affect GDP, though fees or commissions paid for services in these transactions are included if they involve a new production of a service.

Government Transfer Payments

Government transfer payments represent redistributions of income, such as Social Security benefits, and are not considered payments for current goods or services. As a result, changes in these transfers do not directly alter GDP because they do not reflect production activity.

Financial Market Transactions

Movements in financial asset prices, like a rise in stock market values, reflect changes in wealth rather than production. Such transactions do not contribute to GDP since they involve asset trading rather than the production of new goods or services.

Employment and Labor Market Activity

Employment changes, such as an unemployed worker gaining a job, typically affect GDP by increasing production and income. When more individuals enter the workforce, overall economic output and consumption tend to grow, thereby positively influencing GDP measures.

Transcript

Please give Ace some feedback